Official figures showed a bigger than expected 1.2 per cent drop in sales volumes in May compared with the previous month, while the annual 0.9 per cent yearly rise in the amount of goods bought was the lowest since April 2013.

Spending on big ticket items such as furniture and electrical appliances took a hit, with shares in furniture retailer DFS plunging by 52p to 200p as it sounded a profit warning after “significant declines” in store visit numbers.

Chris Williamson, chief business economist at IHS Markit, said: “When prices rise faster than wages, it should be no surprise to see household spending come under pressure, and that’s what the UK is seeing right now.

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Sales had surged to an eight-month high in April

“Sales have now fallen in fi ve of the past seven months, which is a clear warning sign that households are feeling the pinch.

“The squeeze on household budgets is likely to get worse before it gets better. Inflation could well breach 3 per cent in coming months, but there’s little prospect of pay growth picking up.”